Source: Business Wire
LEAWOOD, Kan.–(BUSINESS WIRE)–Rockies Express Pipeline LLC (“REX” or “the Company”) today announced several significant financial and commercial developments.
Repayment of $450 million Senior Unsecured Notes
REX has approved a plan to fully repay the $450 million of debt that is due on April 15, 2015 and will fund the repayment through member cash contributions. The repayment will reduce total long-term debt at REX to $2.575 billion and will notably improve the Company’s leverage profile and capital structure.
Seneca Lateral Achieves Full Capacity
REX has commissioned all of the compressor units of the Seneca Lateral in Noble County, Ohio, thereby increasing the available capacity to the design limit of approximately 600 MMcf/day, all of which is contracted with a weighted average contract life of approximately 14 years. The Seneca Lateral, which serves as an outlet for gas residue from a local processing facility in Noble County, Ohio, was initially commissioned and began limited operation in July of 2014.
Zone 3 East-to-West Project Clears Major Regulatory Hurdle
REX has received approval from the Federal Energy Regulatory Commission (or “FERC”) for its Natural Gas Act section 7(c) certificate application, which authorizes the modification, construction and operation of certain facilities that will create an additional 1,200 MMcf/day of east-to-west flow of gas in Zone 3 of the REX mainline from Monroe County, Ohio to the existing NGPL delivery interconnect located in Moultrie County, Illinois. The additional east-to-west capacity will complement REX’s current capabilities, and will have no adverse impact on REX’s ability to meet its existing firm transportation obligations. The Zone 3 East-to-West project’s approximate capacity of 1,200 MMcf/day within Zone 3 is fully contracted for a weighted average life of 20 years, and is in addition to the approximately 600 MMcf/day of east-to-west capacity being served through the Seneca Lateral and Zone 3 mainline. REX is awaiting receipt of the project’s final Notice to Proceed from the FERC’s staff and currently expects that the Zone 3 East-to-West project will be placed into service sometime during the second half of 2015. When the project is placed into service, REX will have the ability to flow 1,800 MMCF/day of gas in either direction in Zone 3.
Launch of Binding Open Season for New Capacity
REX intends to launch a binding open season later today for up to an additional 800 MMcf/day of east–to-west capacity within Zone 3, which will be accomplished primarily through modification of existing pipeline facilities, namely, the construction of three compressor stations and the installation of additional compressors at an existing station. The project will not require additional pipeline. The project is underwritten by binding precedent agreements for 700 MMcf/day with a weighted average life of 15 years, and, subject to receipt of required regulatory approvals, the project is currently expected to be placed into service during the second half of 2016. When the capacity is placed into service, portions of Zone 3 will have up to 2,600 MMcf/day of east-to-west capacity.
“These important developments represent continued progress on the strategic turnaround of REX, and will further position the pipeline to be a financially stable entity and a critical piece of the North American energy infrastructure,” said Matt Sheehy, President of REX.
About Rockies Express Pipeline
Rockies Express Pipeline LLC is a Delaware limited liability company engaged in the ownership and operation of the Rockies Express Pipeline, a 1,712-mile natural gas transmission pipeline that extends from Opal, Wyoming and Meeker, Colorado to Clarington, Ohio, and is one of the largest natural gas pipelines ever constructed in North America. The system consists of 36-inch and 42-inch diameter pipe with a long-haul design capacity of up to 1,800 million cubic feet of natural gas per day (MMcf/d), eight receipt-only points, six bi-directional points and 35 delivery interconnections that provide access to markets not directly served by the pipeline. The pipeline also has 14 mainline compressor stations and four booster stations with approximately 427,000 total horsepower. In addition, REX has 625 MMcf/day of capacity on the Overthrust Pipeline available to it pursuant to a long-term lease.
Rockies Express Pipeline LLC is a joint venture of: a subsidiary of Tallgrass Development, LP (50 percent share); Sempra U.S. Gas & Power (25 percent share), a subsidiary of Sempra Energy; and a subsidiary of Phillips 66 (25 percent share). A wholly-owned subsidiary of Tallgrass Development, LP operates the pipeline. Tallgrass Development, LP is a member of the Tallgrass Energy family of companies, which includes Tallgrass Energy Partners, LP (NYSE: TEP).
Cautionary Note Concerning Forward-Looking Statements
Some of the information contained in this press release constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company’s management believes its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results will not differ materially from expectations.
Factors that could cause actual results to differ materially from expectations include, but are not limited to, capital markets conditions, interest rates and inflation, as well as factors affecting the production of natural gas and the price and demand for natural gas. Without limiting the generality of the foregoing, forward looking statements include and relate to REX’s ability to repay the $450 million in Senior Notes due in April 2015 and its Members’ ability to fund such repayment, the timing and receipt of the final notice to proceed from the FERC on the East to West Project and the receipt of required regulatory approvals and the construction and completion of an additional 800 MMcf/day of east to west capacity. The Company therefore cautions you against relying on these forward-looking statements. All forward-looking statements attributable to the Company or persons acting on the Company’s behalf are expressly qualified in their entirety by the foregoing cautionary statements. New risks and uncertainties may arise from time to time, and it is impossible for us to predict these events or how they may affect the Company. All such statements speak only as of the date made, and the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.